Analysis of global competitiveness in the light motor vehicle component industry of South Africa.

Abstract

The automotive industry’s global competitiveness has been acknowledged by the South African government and therefore the sector has been identified as a key economic growth sector. The success of the domestic automotive component industry is dependent on efficient business platforms which is essential for the industry to become progressively more internationally competitive, grow exports, stimulate economic growth and create more jobs. The research problem addressed in this study was to establish an in-depth understanding of the extent of South Africa’s global competitiveness in the automotive component manufacturing industry, identifying the factors influencing the component industry’s competitiveness and its impact on economic growth and sustainability of the component industry. A comprehensive literature review was executed to obtain a clear understanding of South Africa’s global competitiveness in the automotive component industry. To achieve the objectives of the study and effectively answer the research question, it was necessary to approach the research from different angles. The research approach to this study was both exploratory and descriptive, therefore both qualitative and quantitative research approaches were executed. The findings of this research clearly indicates that the automotive industry in the medium to long term is dependent on government regulations and policies for the survival of the industry. The findings further highlighted that localisation as a key factor behind successful integration of the South African automotive component industry into the global market. The results obtained from both the qualitative and quantitative research indicated that there was a consensus on many issues regarding the role of government strategies and policies in creating a competitive advantage for the component industry and the importance of government’s intervention in stimulating the industry’s competitiveness. The respondents were virtually unanimous in indicating that the component industry zealously anticipates further changes in government policy in order to increase competiveness of the automotive component industry in the global supply chain. The study also found that there is a need for tariff protection or the industry will collapse in the face of global competition due to increased cheap imports into South Africa. Despite the challenges of globalisation, leaders in the South African automotive component industry remain positive about the future growth of the industry.